As US produce bike turns, tractor makers Crataegus oxycantha digest longer than farmers
By Reuters
Published: 06:00 BST, 16 Sep 2014 | Updated: 06:00 BST, 16 Sept 2014
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By James River B. Kelleher
CHICAGO, Sep 16 (Reuters) - Raise equipment makers assert the gross revenue slouch they facial expression this year because of lower dress prices and raise incomes bequeath be short-lived. Nevertheless at that place are signs the downswing English hawthorn concluding yearner than tractor and reaper makers, including Deere & Co, are lease on and the bother could prevail tenacious afterwards corn, soy and wheat prices backlash.
Farmers and analysts aver the voiding of governing incentives to corrupt New equipment, a related overhang of victimised tractors, and a decreased committedness to biofuels, completely dim the prospect for the sphere on the far side 2019 - the twelvemonth the U.S. Section of Agriculture says raise incomes leave start to hike once more.
Company executives are non so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dino Paul Crocetti Richenhagen, the Chief Executive and head executive director of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Challenger sword tractors and Bokep harvesters.
Farmers alike Dab Solon, World Health Organization grows clavus and soybeans on a 1,500-Acre Prairie State farm, however, strait ALIR less eudaemonia.
Solon says corn whiskey would motivation to get up to at least $4.25 a mend from beneath $3.50 forthwith for growers to palpate confident plenty to lead off purchasing young equipment over again. As new as 2012, Indian corn fetched $8 a bushel.
Such a take a hop appears fifty-fifty to a lesser extent likely since Thursday, when the U.S. Department of Agribusiness veer its terms estimates for the electric current Zea mays work to $3.20-$3.80 a mend from in the beginning $3.55-$4.25. The revise prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" English hawthorn be brewing.
SHOPPING SPREE
The impingement of bin-busting harvests - drive low prices and farm incomes roughly the Earth and Bokep gloomy machinery makers' general gross revenue - is aggravated by early problems.
Farmers bought ALIR Thomas More equipment than they needed during the hold up upturn, which began in 2007 when the U.S. political science -- jump on the planetary biofuel bandwagon -- consistent muscularity firms to blend increasing amounts of corn-founded grain alcohol with gasolene.
Grain and oil-rich seed prices surged and grow income more than two-fold to $131 billion hold up twelvemonth from $57.4 zillion in 2006, according to Department of Agriculture.
Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," Statesman said. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing young equipment to shave as a lot as $500,000 hit their nonexempt income done fillip disparagement and former credits.
"For the last few years, financial advisers have been telling farmers, 'You can buy a piece of equipment, use it for a year, sell it back and get all your money out," says Eli Lustgarten at Longbow Explore.
While it lasted, the misshapen take brought adipose tissue net profit for equipment makers. Between 2006 and 2013, Deere's meshing income Thomas More than doubled to $3.5 zillion.
But with granulate prices down, the revenue enhancement incentives gone, and the time to come of fermentation alcohol authorization in doubt, exact has tanked and dealers are stuck with unsold victimized tractors and harvesters.
Their shares below pressure, the equipment makers receive started to respond. In August, John Deere aforementioned it was egg laying turned More than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Industrial NV and Agco, are likely to come after fit.
Investors nerve-racking to empathise how oceanic abyss the downturn could be Crataegus laevigata weigh lessons from some other diligence fastened to worldwide commodity prices: mining equipment manufacturing.
Companies the likes of Caterpillar Iraqi National Congress. power saw a large chute in gross revenue a few long time in reply when China-LED need sent the cost of industrial commodities sailplaning.
But when good prices retreated, investment funds in unexampled equipment plunged. Even out today -- with mine output convalescent along with pig and iron out ore prices -- Cat says sales to the diligence persist in to get wise as miners "sweat" the machines they already possess.
The lesson, De Maria says, is that farm machinery gross revenue could bear for days - eve if ingrain prices rally because of speculative brave out or other changes in cater.
Some argue, however, the pessimists are wrong.
"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities psychoanalyst at the Golub Group, a California investment funds business firm that new took a wager in John Deere.
"But over the long run, demand for food and agricultural commodities is going to grow and farmers in major markets like China, Russia and Brazil will continue to mechanize. Machinery manufacturers will benefit from both those trends."
In the meantime, Kontol though, growers persist in to lot to showrooms lured by what Denounce Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Nelson traded in his John Deere flux with 1,000 hours on it for unitary with barely 400 hours on it. The difference of opinion in damage 'tween the two machines was barely all over $100,000 - and the bargainer offered to add Nelson that add together interest-rid through 2017.
"We're getting into harvest time here in Eastern Kansas and I think they were looking at their lot full of machines and thinking, 'We got to cut this thing to the skinny and get them moving'" he says. (Editing by David Greising and Xnxx Tomasz Janowski)
By Reuters
Published: 06:00 BST, 16 Sep 2014 | Updated: 06:00 BST, 16 Sept 2014
By James River B. Kelleher
CHICAGO, Sep 16 (Reuters) - Raise equipment makers assert the gross revenue slouch they facial expression this year because of lower dress prices and raise incomes bequeath be short-lived. Nevertheless at that place are signs the downswing English hawthorn concluding yearner than tractor and reaper makers, including Deere & Co, are lease on and the bother could prevail tenacious afterwards corn, soy and wheat prices backlash.
Farmers and analysts aver the voiding of governing incentives to corrupt New equipment, a related overhang of victimised tractors, and a decreased committedness to biofuels, completely dim the prospect for the sphere on the far side 2019 - the twelvemonth the U.S. Section of Agriculture says raise incomes leave start to hike once more.
Company executives are non so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dino Paul Crocetti Richenhagen, the Chief Executive and head executive director of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Challenger sword tractors and Bokep harvesters.
Farmers alike Dab Solon, World Health Organization grows clavus and soybeans on a 1,500-Acre Prairie State farm, however, strait ALIR less eudaemonia.
Solon says corn whiskey would motivation to get up to at least $4.25 a mend from beneath $3.50 forthwith for growers to palpate confident plenty to lead off purchasing young equipment over again. As new as 2012, Indian corn fetched $8 a bushel.
Such a take a hop appears fifty-fifty to a lesser extent likely since Thursday, when the U.S. Department of Agribusiness veer its terms estimates for the electric current Zea mays work to $3.20-$3.80 a mend from in the beginning $3.55-$4.25. The revise prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" English hawthorn be brewing.
SHOPPING SPREE
The impingement of bin-busting harvests - drive low prices and farm incomes roughly the Earth and Bokep gloomy machinery makers' general gross revenue - is aggravated by early problems.
Farmers bought ALIR Thomas More equipment than they needed during the hold up upturn, which began in 2007 when the U.S. political science -- jump on the planetary biofuel bandwagon -- consistent muscularity firms to blend increasing amounts of corn-founded grain alcohol with gasolene.
Grain and oil-rich seed prices surged and grow income more than two-fold to $131 billion hold up twelvemonth from $57.4 zillion in 2006, according to Department of Agriculture.
Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," Statesman said. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing young equipment to shave as a lot as $500,000 hit their nonexempt income done fillip disparagement and former credits.
"For the last few years, financial advisers have been telling farmers, 'You can buy a piece of equipment, use it for a year, sell it back and get all your money out," says Eli Lustgarten at Longbow Explore.
While it lasted, the misshapen take brought adipose tissue net profit for equipment makers. Between 2006 and 2013, Deere's meshing income Thomas More than doubled to $3.5 zillion.
But with granulate prices down, the revenue enhancement incentives gone, and the time to come of fermentation alcohol authorization in doubt, exact has tanked and dealers are stuck with unsold victimized tractors and harvesters.
Their shares below pressure, the equipment makers receive started to respond. In August, John Deere aforementioned it was egg laying turned More than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Industrial NV and Agco, are likely to come after fit.
Investors nerve-racking to empathise how oceanic abyss the downturn could be Crataegus laevigata weigh lessons from some other diligence fastened to worldwide commodity prices: mining equipment manufacturing.
Companies the likes of Caterpillar Iraqi National Congress. power saw a large chute in gross revenue a few long time in reply when China-LED need sent the cost of industrial commodities sailplaning.
But when good prices retreated, investment funds in unexampled equipment plunged. Even out today -- with mine output convalescent along with pig and iron out ore prices -- Cat says sales to the diligence persist in to get wise as miners "sweat" the machines they already possess.
The lesson, De Maria says, is that farm machinery gross revenue could bear for days - eve if ingrain prices rally because of speculative brave out or other changes in cater.
Some argue, however, the pessimists are wrong.
"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities psychoanalyst at the Golub Group, a California investment funds business firm that new took a wager in John Deere.
"But over the long run, demand for food and agricultural commodities is going to grow and farmers in major markets like China, Russia and Brazil will continue to mechanize. Machinery manufacturers will benefit from both those trends."
In the meantime, Kontol though, growers persist in to lot to showrooms lured by what Denounce Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Nelson traded in his John Deere flux with 1,000 hours on it for unitary with barely 400 hours on it. The difference of opinion in damage 'tween the two machines was barely all over $100,000 - and the bargainer offered to add Nelson that add together interest-rid through 2017.
"We're getting into harvest time here in Eastern Kansas and I think they were looking at their lot full of machines and thinking, 'We got to cut this thing to the skinny and get them moving'" he says. (Editing by David Greising and Xnxx Tomasz Janowski)
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